Monday, April 18, 2011

No joy in Medicareville: more on the funny numbers and dishonest packaging of "Ryancare"

GOP Congressional Budget Czar Paul Ryan in the Wall Street Journal:
“Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy.”
Princeton economics professor Uwe Reinhardt begs to differ with Ryan's (false) claim that he's giving Grandma the same health insurance that he and John Boehner "enjoy:"

There is a huge difference in one important aspect between the Medicare program in the Ryan budget plan and the Federal Employee Health Benefit Plan, or F.E.H.B.P., for federal employees and for members of Congress.

Basically, the F.E.H.B.P. is best described as a typical employer-sponsored health insurance plan. The federal government’s – that is, taxpayers’ – annual contribution to the premiums paid to competing private insurers by employees and members of Congress would rise in step with the average premiums charged by the private insurers (see CBO analysis Page 1).

These premiums have been rising over time more or less in step with the overall increase in per-capita health spending in this country.

By contrast, under the Ryan plan, the federal contribution toward the purchase of private health insurance by future Medicare beneficiaries would be indexed only to the Consumer Price Index (see Page 2 of the C.B.O. analysis).

Over the last three decades, the C.P.I. has grown at a much slower rate than per-capita health spending, especially since 2000 (see the chart below).
Health Spending Data: CMS Data & Statistics; C.P.I.: President’s Economic Report to the Congress, 2011, Table B-20.
As the Congressional Budget Office noted in its analysis of the Ryan proposal, for a typical 65-year-old with average health spending enrolled in a private plan
with benefits similar to those currently provided by Medicare, C.B.O. estimated the beneficiary’s spending on premiums and out-of-pocket expenditure as a share of a benchmark: what total health care spending would be if a private insurer covered the beneficiary. By 2030, the beneficiary’s spending would be 68 percent of that benchmark under the proposal.
If private insurance premiums after 2030 continued to grow at a rate exceeding the growth in the C.P.I., the federal contribution to Medicare might shrink even further...

Politicians and elected officials appear to have concluded from years of experience that the public has never favored those who tell them the harsh truth. It’s almost as though the public wants to be misled.

The specific proposals aside, does the Ryan plan offers anything to control overall health-care spending?

No, nor does that appear to have been Mr. Ryan’s objective.
 From New York Times "Economix"

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